Monday, January 14, 2008

States Have Options on Fixing the Mortgage Crisis Caused by the Lending Industry

The Progressive States Network considers the conservative hypocrisy of holding subprime borrowers accountable without faulting lenders:

[I]f economic irresponsibility is supposed to be punished, why did bonuses for Wall Street executives rise 14%, despite those firms having a direct hand in the subprime crisis, with the top four investment banks paying out almost $30 billion in bonuses?
Why were they awarded rather than punished? Because the wealthy have the resources to write themselves off the ledger of responsibility and the poor--once easy targets for predatory advertising--do not have comparative resources to deflect disproportionate blame.

PSN has some ideas for state governments in the absence of leadership in Washington: imposing a moratorium on foreclosures, allowing homeowners to become renters rather than being evicted, and requiring upkeep by those who control foreclosed properties. With the cost of declining property values in the hundreds of billions of dollars and with animal control shelters filling with abandoned family pets resulting from foreclosures, local communities like our own will only be broadly hurt by the failure of states to at least implement some of these ideas.

UPDATE: In the meantime, apartment prices rise in Nashville. Another sign of a declining mortgage and housing market.


  1. Predatory advertising? That's the first time I've heard that phrase. Funniest thing I've read today. If you can read the ad, you can read the contract you are signing. If you can't read the contract, don't sign it. If you sign a contract you didn't read, don't come crying to me. Nobody held a gun to your head and made you sign it. No amount of "Predatory Advertising" can force you to sign anything against your will.

  2. Lower class neighorhoods tend to be besieged by predatory lenders who prey on consumers by playing up dire financial situations they find themselves in and "marketing" their product as a low risk answer.

    I am always amused at how defenders of so-called "free" markets hold consumers more responsible than marketers and lenders as if the whole idea of marketing a product does not involve twisting truths and hiding facts and downplaying risk and lobbying against consumer protection in order to sell something.

    Predatory advertising (as opposed to honest advertising; you don't mean to argue that all advertising is honest do you?) is an appropriate term for a lot of subprime lending practices in poorer communities. Any one of us might find ourselves at any time drowning and grasping at straws that are pitched to us as life lines. I just believe that if businesses are going to advertise life lines, they shouldn't hocking straws.

    BTW, encouraging the government to regulate the mortgage industry is caveat emptor by another name.